WSJ "US Inflation Worsens Inequality"

[Asia Economy Reporter Park Byung-hee] The Wall Street Journal (WSJ) reported on the 16th (local time) that recent U.S. inflation has outpaced wage growth, causing a rapid rise that could worsen income inequality, at least in the short term.

According to the U.S. Department of Labor, the Consumer Price Index (CPI) in April rose 4.2% compared to a year earlier, but the hourly wages of production and non-supervisory workers increased by only 1.2%.

As a result, the real wages of production and non-supervisory workers, adjusted for last month's inflation, fell by 3.3% compared to a year ago. WSJ reported this as the largest decline since 1980.

Inflation tends to have a regressive effect that disadvantages the poor. There are also criticisms that the causes of inflation stem from fiscal and monetary policies focused on economic stimulus, operated by the Joe Biden administration and the U.S. central bank, the Federal Reserve (Fed). In this regard, WSJ pointed out that the Biden administration's fiscal policy focused on economic stimulus may contradict the administration's goal of reducing inequality.

Karen Petrou, author of the book The Engine of Inequality, said that about a decade of low interest rate policies has generally helped the wealthy increase their assets through rising stock prices, adding, "From the perspective of economic inequality, nothing good is happening."

The Fed maintains that the price increases are temporary and intends to continue focusing monetary policy on economic stimulus. Fed Chair Jerome Powell stated at a press conference following the Federal Open Market Committee (FOMC) regular meeting on the 28th of last month, "It seems unlikely that we will see prices continuously rising," indicating that zero-level interest rates and current asset purchases will be maintained.

This content was produced with the assistance of AI translation services.